GBP/USD – British Pound Steady in Light Holiday Trade

GBP/USD has edged lower in the Tuesday session, as the pair trades at 1.2240. On the release front, there are no British events as British markets are closed for a holiday. The UK wrapped up last week with on a positive note, as GDP was revised upwards to 0.7%, edging above the forecast of 0.6%. In the US, today’s highlight is CB Consumer Confidence, with the indicator expected to climb to 108.9 points. On Wednesday, the US releases Pending Home Sales, with the markets anticipating a strong gain of 0.6%.

The US economy continues to expand at a brisk clip, as underscored by the most recent revision to third quarter GDP. The Final GDP reading of 3.5% beat the estimate of 3.2%. This figure marked an upward revision of the previous GDP estimate of 3.2%. The stellar reading can be attributed to stronger consumer spending and an increase in business investment, and marked the strongest growth rate since the third quarter of 2015.

US indicators looked sharp to end the week. New Home Sales jumped to 592 thousand, which translated into an increase of 5.2%. This easily beat the forecast of 575 thousand. There was more good news from UoM Consumer Sentiment, which climbed to a 12-year high, with a reading of 93.8 points. The indicator was sharply higher than the previous reading of 93.2 points. The survey found that consumers are optimistic that the economy will continue to improve under Donald Trump. The president-elect has said he will cut taxes while increasing fiscal spending in order to pay for massive infrastructure improvements. The survey also noted that consumers expect economic growth to create new jobs and raise incomes.

The pound has not looked sharp in the fourth quarter, as GBP/USD has slipped as much as 4.9% during since October 1. The pound took another hit after the Federal Reserve raised rates earlier in December. At the same time, British economic numbers have been respectable in Q4, as the economy has defied the doomsayers who forecast disaster after the Brexit referendum vote in June. However, Britain and the European Union will soon begin tough negotiations over Britain’s departure, and if this leads to renewed Brexit jitters, the pound could respond with losses.

 

GBP/USD Fundamentals

Tuesday (December 27)

  • 9:00 US S&P/CS Composite-20 HPI. Estimate 5.0%
  • 10:00 US CB Consumer Confidence. Estimate 108.9
  • 10:00 US Richmond Manufacturing Index. Estimate 5 points

Wednesday (December 28)

  • 10:00 US Pending Home Sales. Estimate 0.6%

*All release times are EST

* Key events are in bold

GBP/USD for Tuesday, December 27, 2016

GBP/USD December 27 at 8:50 EST

Open: 1.2271 High: 1.2286 Low: 1.2240 Close: 1.2241

GBP/USD Technical

S1 S2 S1 R1 R2 R3
1.1844 1.1943 1.2111 1.2272 1.2351 1.2471
  • GBP/USD was flat in the Asian session and has posted slight losses in European trade
  • 1.2111 is providing support
  • 1.2272 was tested earlier in support and is a weak line

Further levels in both directions:

  • Below: 1.2111, 1.1943 and 1.1844
  • Above: 1.2272, 1.2351, 1.2471 and 1.2620
  • Current range: 1.2111 to 1.2272

OANDA’s Open Positions Ratio

GBP/USD ratio is showing long positions with a majority (59%), indicative of trader bias towards GBP/USD reversing directions and moving upwards.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.